Most MSMEs must maintain financial relationships with different institutions simultaneously, managing multiple bank accounts, holding investments, utilising loan facilities and using different payment platforms. Gathering all this information can be time-consuming and frustrating when you need it frequently to apply for loans or financial services.
Account aggregation changes this by allowing you to securely share those records with financial institutions using an RBI-approved consent-based model. This enables businesses in retail and manufacturing to access working capital more quickly, based on digitally shared cash-flow data from Financial Information Providers (FIPs) rather than manual paperwork.
What is account aggregation?
Account aggregation is a method for consolidating financial information, such as bank statements or financial records, and sharing it through a single consent framework. This prevents the hassle of manually compiling data, making financial management and analysis easier.
You can aggregate all kinds of financial data, including:
- Loan account information
- Credit card records
- Bank account balances and transactions
- Insurance policies and pension records
- Mutual fund and investment accounts
How the account aggregator framework works in India
The account aggregation ecosystem works under a regulatory framework introduced by the RBI in 2016. It was subsequently scaled and became operational at a broader level from 2021 onwards through phased adoption across financial institutions under a specialised category of non-banking financial companies known as NBFC-Account Aggregators (NBFC-AA).
These consent-based intermediaries facilitate the secure transfer of financial information between institutions. Account aggregators do not store financial data beyond what is necessary for secure transmission and consent management, and they do not use the data for any other purpose; their role is to securely transfer information once consent is provided.
Key entities in the AA ecosystem
The AA ecosystem involves three key entities:
- Account Aggregator (AA): The intermediary that transfers financial data between lenders and institutions.
- Financial Information Provider (FIP): Institutions that store financial data, including banks, asset management firms, NBFCs, insurance companies and GSTN.
- Financial Information User (FIU): Regulated entities that utilise financial data to provide services such as investment advice, financial analysis and lending.
Financial data is transferred between these entities only when the user provides explicit consent.
Account aggregation in practice
The account aggregation process involves the following steps:
- Register your business with an RBI-licensed Account Aggregator platform.
- Complete your KYC (as required by the specific AA platform and use case) with Aadhaar or PAN.
- Link your bank account, investments, mutual funds or GST accounts from the platform’s list of supported institutions.
- Grant consent for exact data and recipients, such as a lender requiring three months of statements.
- The account aggregator securely transmits encrypted financial data from the FIP.
- The data is then transferred to the Financial Information User requesting it, with full control to revoke consent at any time.
How is account aggregation beneficial for businesses
Businesses, especially MSMEs, benefit from account aggregation in many ways, such as:
- Faster loan approvals: Account aggregation opens the door to invoice- or turnover-based financing without site visits. Businesses can share GST and bank transactions to enable quicker loan evaluations.
- Licensed account aggregators: The RBI lists more than 17 operational Account Aggregators, including CAMSFinServ, Finvu, OneMoney, Anumati and TallyEdge.
- Less paperwork: Account aggregation eliminates the hassle of collecting and submitting multiple documents by allowing institutions to share digital data in one place.
- Better financial visibility and planning: It enables businesses to view consolidated financial information from multiple accounts and understand cash flow patterns, liabilities and overall financial performance. This helps businesses analyse trends across multiple accounts and make more conscious decisions about investments, expenses or expansion plans.
- Increased access to credit: Lenders can evaluate financial information more accurately using verified digital records, thereby expanding access to formal credit.
Security and data consent in account aggregation
As mentioned earlier, the account aggregation system depends on a consent-based framework, and financial data is only shared after explicit authorisation from the account holder, which means that:
- All shared information is fully encrypted.
- The consent is purpose-specific and time-bound, and you can revoke it at any time.
- Account aggregators are not allowed to retain or monetise customer financial data, and they only manage consent artefacts and secure data flow.
Final remarks
Account aggregation enables MSMEs to access financing more efficiently within a licensed RBI framework, making the entire process more convenient, secure and encrypted.
As part of India’s Digital Public Infrastructure (DPI) ecosystem, account aggregation is increasingly being adopted across lending, wealth management and other financial services to enable seamless, consent-driven data sharing.
With access to a wide network of banks for automated bank feeds and account aggregation data, TallyPrime supports importing bank statements from various banks and automatically organising them into ledgers and reports, helping businesses maintain accurate, organised financial records.
